Source : Globe & Mail

Industry minister's path started with review panel report

OTTAWA — Just a few weeks after being sworn in as Industry Minister in February, Maxime Bernier was lunching at his department headquarters in Ottawa with key staff, a few high-ranking bureaucrats, and members of an outside panel that had just laid out a path for the country's telecommunications sector.

Mr. Bernier, with little or no experience in the industry, listened closely as then-deputy minister Suzanne Hurtubise suggested he allow a Canadian Radio-television and Telecommunications Commission decision to regulate the budding VoIP (voice over Internet protocol) industry.

It would be too technical and detailed, the department's top official suggested, to explain to other cabinet ministers why they should take the extremely unusual step -- and political risk -- of overturning the regulator's decision.

But a source who attended the event said members of the review panel took issue with Ms. Hurtubise's recommendation. They argued that the critical question was not whether the subject matter was easy to digest during a busy cabinet meeting -- but whether the government and its regulator should simply keep their hands off.

Mr. Bernier listened as the telecom review panel members argued that VoIP, a breakthrough technology that allows phone calls to be made through Internet infrastructure, is an important niche that should be left as unfettered as possible. They said there were also questions about whether governments can do much to regulate such border-free technologies, anyway.

For Mr. Bernier, a staunch advocate of free markets and small government, it was a critical moment.

Before he had finished his fish lunch, the rookie minister had started down a path that would define his first year in office. Within hours, he was digging into the panel's 392-page report and starting to think seriously about reform.

Mr. Bernier, a lawyer and former executive with the Montreal Economic Institute, a free-markets think tank, would eventually open up part of the VoIP market while also charting a course that would put him in conflict with more pragmatic members of cabinet and within the senior ranks of his new department. Some in each of those influential groups would prefer that the Beauce, Que., native focus more on specific policy goals, instead of broader philosophical ideals.

This week, he added to his roster of telecom changes when he announced that he intends to overrule another major CRTC decision, this time the commission's move to continue regulating local phone services.

But in a cabinet portfolio that covers just about every industry, why was a political neophyte with no previous connection to telecom so focused on that sector?

"The stars were aligned on telecom," a government source said.

Mr. Bernier's choice to focus on telecom was the result of both opportunity and need, government and industry sources say. The telecom panel report provided a starting point, but Mr. Bernier's determination was also reinforced by the appeals of two key CRTC decisions, the existing strength and export success of Canada's telecom sector, and the generational gap between the technology driving the industry and many of the regulations that governed it.

"We had not rethought the new world in light of the new technologies," said Nancy Hughes Anthony, who is president of the Canadian Chamber of Commerce, a broad-based business group that has followed the telecom reforms closely.

Iain Grant, managing director of SeaBoard Group, a telecom consulting firm in Montreal, said the panel report had also laid much of the groundwork for reform, which allowed Mr. Bernier to make some much-needed changes before the minority Conservative government faced another election, expected some time next year. "There's only so much you can do in any amount of time."

Mr. Bernier, whose economic philosophy tends to put the consumer first, believes his reforms will lead to more competition, which should then trigger lower prices, greater innovation, and better services.

He had entered federal politics wanting to cut regulation and make the economy more competitive, and a major opportunity had just landed in his lap.

In the ensuing months, the minister didn't waver either in his efforts to overhaul the multibillion-a-year industry or in his laissez faire vision.

On Monday, the government launched a process to speed up deregulation in that key market, and change the way it defines competition for about 60 per cent of the country.

Last week, Mr. Bernier announced he would give the Competition Bureau the power to slap fines of up to $15-million on large telephone and cable companies if they abuse their market power. Less than a month earlier, Mr. Bernier said he intended to rewrite part of the CRTC's decision on VoIP services.

He has also embraced the review panel's call for a more market-based industry and has done little to quell talk that he could make changes to foreign ownership restrictions.

For the most part, Mr. Bernier has also kept the support of the industry's biggest players, Bell Canada, Telus Corp. and the cable companies.

Government officials, however, say the minister is by no means finished with telecom: His agenda includes the desire for another wireless carrier, a likely spectrum auction, reform of the CRTC itself, playing a role in the selection of a new chair for the commission, developing a science and technology strategy that will encompass telecom, and maybe even changes to the sector's foreign ownership restrictions.

"He's just getting started," a government source said.

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